Ventures West News
Welcome to Ventures West's quarterly newsletter, which keeps you updated on the latest Ventures West news, investments and insights. This newsletter is distributed to our network of colleagues, portfolio company executives and investors.
Details on our most recent investments, both new and follow-on, are found below. Ventures West just capped off our busiest year ever, with nine new investments, 13 follow-ons, and five exits. In 2007, we invested over $70 million in seed and early stage deals.
This quarter's newsletter article by Ted Anderson gives a good overview of the venture capital industry and Ventures West activities in 2007 and takes a look forward to 2008.
to top
Welcome to Ventures West's quarterly newsletter, which keeps you updated on the latest Ventures West news, investments and insights. This newsletter is distributed to our network of colleagues, portfolio company executives and investors.
Details on our most recent investments, both new and follow-on, are found below. Ventures West just capped off our busiest year ever, with nine new investments, 13 follow-ons, and five exits. In 2007, we invested over $70 million in seed and early stage deals.
This quarter's newsletter article by Ted Anderson gives a good overview of the venture capital industry and Ventures West activities in 2007 and takes a look forward to 2008.
to top
New Investments
In November, Ventures West led the C$10 Million Series A financing in Montreal-based SiXtron, a developer of thin film coatings for solar cells. You can find the press release here - http://www.ventureswest.com/News/news11070701.asp
In December, we announced our participation in the first round of venture capital financing in Viigo, a developer of software that delivers content to mobile devices. To read the financing press release, click here - http://www.ventureswest.com/News/news12180701.asp
to top
In November, Ventures West led the C$10 Million Series A financing in Montreal-based SiXtron, a developer of thin film coatings for solar cells. You can find the press release here - http://www.ventureswest.com/News/news11070701.asp In December, we announced our participation in the first round of venture capital financing in Viigo, a developer of software that delivers content to mobile devices. To read the financing press release, click here - http://www.ventureswest.com/News/news12180701.asp to top
Follow On Investments
In December, Ventures West participated in a $17.5M financing of BelAir Networks. BelAir is a provider of mobile wireless broadband mesh network solutions.
Zeugma announced the completion of its US$22.5M Series B Financing. The round was led by new investor Vertex Venture Capital and included returning investors Ventures West, Granite Ventures, Yaletown, GrowthWorks and BDC, as well as new investors GTD Capital and BC Advantage Funds. Zeugma will use the funds to bring to market its networking system for broadband service providers.
to top
In December, Ventures West participated in a $17.5M financing of BelAir Networks. BelAir is a provider of mobile wireless broadband mesh network solutions.Zeugma announced the completion of its US$22.5M Series B Financing. The round was led by new investor Vertex Venture Capital and included returning investors Ventures West, Granite Ventures, Yaletown, GrowthWorks and BDC, as well as new investors GTD Capital and BC Advantage Funds. Zeugma will use the funds to bring to market its networking system for broadband service providers.
to top
Exits
In December, NUVO announced that it had agreed to be acquired by Versata Enterprises, a privately held enterprise solution provider based in Texas.
Also in December, TimeSpring announced that it had been acquired by Mass.-based Double-Take. Double-Take is a NASDAQ traded provider of data protection, back-up and recovery services for enterprises.
to top
In December, NUVO announced that it had agreed to be acquired by Versata Enterprises, a privately held enterprise solution provider based in Texas. Also in December, TimeSpring announced that it had been acquired by Mass.-based Double-Take. Double-Take is a NASDAQ traded provider of data protection, back-up and recovery services for enterprises.
to top
Year in Review
By Ted Anderson, Managing General Partner
As 2007 drew to a close we watched the economic environment in North America begin to deteriorate. Triggered by the collapse of the sub-prime mortgage market and associated derivative based financial instruments, the meltdown of the financial services industry is sure to have widespread effects. It is anticipated that this malaise will impact consumer spending and other areas of the general economy, leading to a period of economic turmoil and perhaps even recession. The likely impact of this on the venture capital industry will be a decrease in the funds available for investment in early stage opportunities, the closing of the public equity markets as a source of capital or liquidity and, given that the source of future capital requirements will be less clear, a re-focusing by venture investors on existing portfolio companies.
Having already lived through several similar business cycles over the last number of years, we here at Ventures West know that they are a regularly occurring phenomenon. We also know that companies that are supported today will be in a great position when the economy ultimately turns. We believe this is an ideal time to be investing in early stage opportunities as they will have a distinct advantage when market windows open again.
Venture capital industry statistics for 2007 have recently been published by Thomson Financial and they tell an interesting story. Even amidst the doom and gloom VC activity in Canada increased by 21% with a total of $2.1 billion invested in early stage companies. The amount of funds raised by Canadian VC firms declined for the fifth time in the last six years (vs. five consecutive years of growth in U.S. venture firm fundraising levels). Canadian VC firms raised a total of $1.19 billion in new capital in 2007, which is down significantly from the $1.64 billion in new capital raised in 2006. This is, obviously, a worrisome trend, especially when combined with the situation in the credit and banking markets and the lack of interest in early stage companies by the public markets. This also likely foreshadows a decline in new investments over the year to come. Not only is there less capital to invest but each investment will likely require larger reserves as other typical sources of later stage capital may not be available.
In previous newsletters we have expressed concern regarding the average amount invested per company in Canada compared to that invested in the U.S. We were pleased to see that in 2007, the average Canadian VC investment was $5 million, a 19% increase from the average in 2006 and a 60% increase from the average in 2005. Though this represents a positive trend, the Canadian average is still only half of the average investment made into U.S. companies.
In 2007, Ventures West investment levels increased as well - In fact, we had a record year. We invested over $70 million in early stage technology companies in the cleantech, biotech and communications sectors. Details on are new 2007 portfolio companies are highlighted below.
Ventures West Highlights
During 2007 Ventures West made nine new investments, as well as 13 follow-on investments, investing a total of $71 million. Our investments covered a broad spectrum of industries including mobile, advanced materials, high performance computing, oncology, drug discovery, and solar, among others.
New Investments
Aegis Mobility is an innovative wireless services company empowering the next generation of location based services. www.aegismobility.com
A privately-held pharmaceutical company developing targeted small molecule therapeutics for the treatment of cancer and inflammatory disease. www.aqxpharma.com
EQO has developed a mobile service platform that keeps people connected to their online communities and instant messaging networks from their mobile phones. www.eqo.com
Presidio Pharmaceuticals is a specialty pharmaceutical company focused on developing and commercializing novel, small molecule compounds for the treatment of HIV-1, HCV and other chronic viral infections. www.presidiopharma.com
QuickPlay Media provides content management and service delivery solutions for mobile television and video services. www.quickplay.com
RapidMind provides a development and runtime platform that enables software organizations to fully exploit the parallel power of multi-core and stream processors, including Intel and AMD CPUs, GPUs and the Cell BE. www.rapidmind.net
Based in Montreal, SiXton is a developer of a proprietary process to produce SiC based thin films with unique anti-reflective and passivation properties, without the complex requirements of hazardous compressed gases. www.sixtron.com
SWITCH Materials specializes in the design and synthesis of photochromic and electrochromic organic materials that cover a broad spectrum of commercial applications. www.switchmaterials.com
Viigo is a leading developer of mobile application software. The Viigo Platform not only offers an unparalleled mobile user experience, but provides companies with the fastest possible way to mobilize content. www.viigo.com
Exits
As was the trend with the industry as a whole, M&A was the dominant VC-backed exit strategy this year for our portfolio companies. Overall, five of our investees were acquired.
Cellex Power was acquired by Plug Power (NASDAQ: PLUG) for US$45 million in cash. Cellex Power is a leader in fuel cell power solutions for industrial vehicles.
Fincentic was acquired by Open Solutions Inc. (NASDAQ: OPEN). Fincentric is a leading provider of core retail banking and customer value management software to the global financial services industry.
NUVO Networks announced that it had agreed to be acquired by Versata Enterprises, a privately held enterprise solution provider based in Texas.
Timespring was acquired by Mass.-based Double-Take (NASDAQ: DBTK). TimeSpring is a continuous data protection software company.
TIR was acquired by Phillips, (Royal Philips Electronics NYSE:PHG, AEX:PHI) for C$75 million in cash. TIR is a leading supplier of specialized Solid State Lighting (SSL) technology and products for high quality white light.
Outlook for 2008
We believe that 2008 will prove to be a great year in the venture capital business. We are not denying the many challenges ahead for the Canadian and global economy but we believe that the companies that we are investing in today will be well positioned for when the current economic issues are resolved and growth, optimism and enthusiasm return.
to topBy Ted Anderson, Managing General Partner
As 2007 drew to a close we watched the economic environment in North America begin to deteriorate. Triggered by the collapse of the sub-prime mortgage market and associated derivative based financial instruments, the meltdown of the financial services industry is sure to have widespread effects. It is anticipated that this malaise will impact consumer spending and other areas of the general economy, leading to a period of economic turmoil and perhaps even recession. The likely impact of this on the venture capital industry will be a decrease in the funds available for investment in early stage opportunities, the closing of the public equity markets as a source of capital or liquidity and, given that the source of future capital requirements will be less clear, a re-focusing by venture investors on existing portfolio companies.
Having already lived through several similar business cycles over the last number of years, we here at Ventures West know that they are a regularly occurring phenomenon. We also know that companies that are supported today will be in a great position when the economy ultimately turns. We believe this is an ideal time to be investing in early stage opportunities as they will have a distinct advantage when market windows open again.
Venture capital industry statistics for 2007 have recently been published by Thomson Financial and they tell an interesting story. Even amidst the doom and gloom VC activity in Canada increased by 21% with a total of $2.1 billion invested in early stage companies. The amount of funds raised by Canadian VC firms declined for the fifth time in the last six years (vs. five consecutive years of growth in U.S. venture firm fundraising levels). Canadian VC firms raised a total of $1.19 billion in new capital in 2007, which is down significantly from the $1.64 billion in new capital raised in 2006. This is, obviously, a worrisome trend, especially when combined with the situation in the credit and banking markets and the lack of interest in early stage companies by the public markets. This also likely foreshadows a decline in new investments over the year to come. Not only is there less capital to invest but each investment will likely require larger reserves as other typical sources of later stage capital may not be available.
In previous newsletters we have expressed concern regarding the average amount invested per company in Canada compared to that invested in the U.S. We were pleased to see that in 2007, the average Canadian VC investment was $5 million, a 19% increase from the average in 2006 and a 60% increase from the average in 2005. Though this represents a positive trend, the Canadian average is still only half of the average investment made into U.S. companies.
In 2007, Ventures West investment levels increased as well - In fact, we had a record year. We invested over $70 million in early stage technology companies in the cleantech, biotech and communications sectors. Details on are new 2007 portfolio companies are highlighted below.
Ventures West Highlights
During 2007 Ventures West made nine new investments, as well as 13 follow-on investments, investing a total of $71 million. Our investments covered a broad spectrum of industries including mobile, advanced materials, high performance computing, oncology, drug discovery, and solar, among others.
New Investments
Aegis Mobility is an innovative wireless services company empowering the next generation of location based services. www.aegismobility.com A privately-held pharmaceutical company developing targeted small molecule therapeutics for the treatment of cancer and inflammatory disease. www.aqxpharma.com EQO has developed a mobile service platform that keeps people connected to their online communities and instant messaging networks from their mobile phones. www.eqo.com Presidio Pharmaceuticals is a specialty pharmaceutical company focused on developing and commercializing novel, small molecule compounds for the treatment of HIV-1, HCV and other chronic viral infections. www.presidiopharma.com QuickPlay Media provides content management and service delivery solutions for mobile television and video services. www.quickplay.com RapidMind provides a development and runtime platform that enables software organizations to fully exploit the parallel power of multi-core and stream processors, including Intel and AMD CPUs, GPUs and the Cell BE. www.rapidmind.net Based in Montreal, SiXton is a developer of a proprietary process to produce SiC based thin films with unique anti-reflective and passivation properties, without the complex requirements of hazardous compressed gases. www.sixtron.com SWITCH Materials specializes in the design and synthesis of photochromic and electrochromic organic materials that cover a broad spectrum of commercial applications. www.switchmaterials.com Viigo is a leading developer of mobile application software. The Viigo Platform not only offers an unparalleled mobile user experience, but provides companies with the fastest possible way to mobilize content. www.viigo.com Exits
As was the trend with the industry as a whole, M&A was the dominant VC-backed exit strategy this year for our portfolio companies. Overall, five of our investees were acquired.
Cellex Power was acquired by Plug Power (NASDAQ: PLUG) for US$45 million in cash. Cellex Power is a leader in fuel cell power solutions for industrial vehicles. Fincentic was acquired by Open Solutions Inc. (NASDAQ: OPEN). Fincentric is a leading provider of core retail banking and customer value management software to the global financial services industry. NUVO Networks announced that it had agreed to be acquired by Versata Enterprises, a privately held enterprise solution provider based in Texas. Timespring was acquired by Mass.-based Double-Take (NASDAQ: DBTK). TimeSpring is a continuous data protection software company. TIR was acquired by Phillips, (Royal Philips Electronics NYSE:PHG, AEX:PHI) for C$75 million in cash. TIR is a leading supplier of specialized Solid State Lighting (SSL) technology and products for high quality white light. Outlook for 2008
We believe that 2008 will prove to be a great year in the venture capital business. We are not denying the many challenges ahead for the Canadian and global economy but we believe that the companies that we are investing in today will be well positioned for when the current economic issues are resolved and growth, optimism and enthusiasm return.